Clearwire Still Pursues Other Funding Options Beyond $1.3 Billion Debt Sale
Other funding options for Clearwire, including spectrum sales and equity financing, are still on the table in addition to the $1.3 billion debt the company is trying to raise, Chief Financial Officer Erik Prusch said Friday. Sprint Nextel, which owns 54 percent of Clearwire, has about a month to decide if it plans to buy into $760 million of convertible debt Clearwire gave it rights to buy. Sprint declined to comment on whether it will participate.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
Clearwire is exploring different options on a possible spectrum sale, Prusch said at a JP Morgan Chase investor conference in New York. That includes a potential spectrum sale in regional or market-by-market chunks, he said. It’s still too early to tell how the auction process will turn out, he said. There has been strong interest in the spectrum portfolio, he noted.
The debt market was “hot” and the company had to pull the trigger on its offering, Prusch said. The company had planned to complete debt financing at the same time as a spectrum sale and new equity financing, he noted. Clearwire disclosed the debt offering Thursday. It’s still searching for more money to continue its WiMAX buildout and expects to have some clarity on its funding issues by the end of Q4 or the beginning of Q1 next year, Prusch said. The money would provide some much-needed flexibility, he said. Clearwire recently warned that without additional funding, it could run out of cash next year. Meanwhile, Clearwire’s $45 unlimited monthly plan is better than Verizon Wireless’ LTE $50 plan with a 5 GB cap, Prusch said. Verizon’s LTE service, which was set to have gone live Sunday, would raise consumer interest in 4G service, he said.
Analysts had mixed views. It’s positive that Clearwire was able to complete the financing, though the debt is expensive, some said. There’s still considerable risk Clearwire doesn’t have enough funding to complete the rollout, Gimme Credit David Novosel said. Sprint’s expected deployment of WiMAX capable base stations starting mid-2011 as part of its network upgrade would reduce the amount of capital that Clearwire needs going forward, Credit Suisse’s Jonathan Chaplin said. He said that Sprint may wait until it finalizes plans for its network build out before making a funding commitment related to Clearwire.